The OECD’s Innovation Strategy: Policies to Turn Ideas into Human Progress


Remarks by Angel Gurría, OECD Secretary-General, University of Witwatersrand, South Africa

20 July 2010

Ladies and Gentlemen:

It is a great pleasure to be here at the University of Witwatersrand, an institution known throughout the world for its cutting edge research and academic excellence.


Universities sketch the future of our nations. So it’s great news to know that Wits has been ranked among the top universities in the world in seven fields of research, with Centers of Excellence in key areas like Biomedicine, Strong Materials and Aerospace. Congratulations!


South Africa has just impressed the whole world with a thorough and brilliant organisation of the Football World Cup. I am sure that there are many other crucial fields in which this country will surprise the world. Innovation is one of them, and this is why I am here today; to talk about the magic power of innovation and OECD’s work in this strategic policy field.


1. The magic power of innovation

Let me start by reminding us that the world economy is still confronting very delicate challenges. The crisis has left deep scars in our economies. Recovery is underway, but countries face new risks and complexities.


The only viable way to address the current delicate trade-offs - like unacceptably high levels of unemployment and unsustainable fiscal deficits - and to build a stronger, cleaner and fairer world economy, is to develop new sources of growth. Innovation, in its broadest, most far-reaching sense, stands out as one of the most efficient ways to do so.


Innovation has always been an important driver of growth. More than a century ago, Schumpeter already pointed to innovation as the engine of economic progress. However, in recent times, the importance of innovation has grown significantly.


More than ever, we need to reboot our economies with a more intelligent type of growth, driven by new start-ups, by the most innovative small and medium enterprises, and by our need to develop efficient renewable energies and green technologies for a low-carbon era. Innovation can help us do the trick.


Innovation can also help us reduce the disparities in our economies. Innovative systems and technologies can help our governments improve public services delivery. But it can also trigger unattended pro-poor development tools. Like the transformation of SMS texting on mobile phones into a virtual banking service which allows migrants to send money via SMS without the need of a bank account. An African company, Safaricom from Kenya, pioneered this innovation.


To foster sustainable growth and to reduce disparities, governments have to create favourable environments for innovation to bloom. And this requires that they develop a broader understanding of innovation.


2. Rethinking innovation: time for a broader understanding

And I say this because, over the past decade, the nature of innovation has changed dramatically due to globalisation; to the emergence of new players like China, India and South Africa; to the widespread diffusion of information and communication technologies; and to competitive pressures to engage in more “open” innovating methods.


Individually, any of these changes marks an important shift; collectively, these changes have transformed the nature of innovation – how it is performed, where it occurs, who does it and what it consists of. 

In light of these changes, we need to rethink our policies designed to nurture and guide innovation.


We need to rethink, for example, the role that universities and public research organisations play in our economies. They are essential nodes in the innovation system and we need to grant them more freedom and independence, encouraging them to compete and become world class innovation catalysts.
But to empower people to innovate, we also need to develop wide-ranging skills that complement formal education, thus adapting curricula and pedagogies to equip students with the capacity to learn and apply new skills throughout their lives.


We also need to see innovation as a system. Our innovation policies should go beyond simply supporting science and technology (S&T). Countries need whole-of-government innovation strategies, capable of aligning the different Ministries, policies and reforms around a nation-wide “innovation effort”.


Policies should be put in place to promote entrepreneurship and support the creativity of young innovative firms with high growth potential and ambition - the so called “gazelles”. These firms tend to be the source of radically new, “disruptive innovations”; they also tend to generate large productivity and employment gains.


In this complex context of crisis and change, where productivity growth may depend more and more on “disruptive” innovation, governments need help to build a coherent, far reaching and successful innovation policy.


To help governments develop such a policy, the OECD has been working on what we call the OECD’s Innovation Strategy.


3. The OECD’s Innovation Strategy

The OECD’s Innovation Strategy is one of the first, whole-of-government exercises that seek to look at “innovation” not from the narrow lens of just science and technology, but more broadly from a wide expanse of policy areas.


It is built around five priorities for government action: 1) Empowering people to innovate; 2) Unleashing innovation in firms; 3) Creating and applying knowledge; 4) Applying innovation to address global and social challenges; and 5) Improving the governance of policies for innovation.


It build on the OECD’s multidisciplinary experience and takes into account the interplay of different policy domains, bringing them together through supportive mechanisms for governance; highlighting experiences and good practices from countries around the world.


This Strategy does not have all the answers or prescribe a one-size-fits-all approach, but it provides an invaluable benchmark and guide to help governments create the ideal environment for innovation.


Now, let me conclude this presentation by stressing a key dimension of innovation that is becoming highly important for our survival as human beings: and this is its capacity to foster green growth.


4. Innovation and green growth

At the OECD we have been working to tackle environmental degradation and climate change for several decades. We need now a broad, integrated mix of policies in order to achieve stronger and greener growth.


Market mechanisms will be crucial within such policy packages. Some of the most effective tools include getting the prices right, encouraging investment in green technologies and eliminating harmful policies, like fossil fuel subsidies. But boosting innovation will be crucial to develop the renewable energies that will allow us to reduce our CO2 emissions by at least 50% (below 2000 levels) by 2050.


This is particularly relevant to emerging economies like South Africa. As all the increase in world oil demand between 2007 and 2030 will come from emerging and developing countries; as well as 90% of the increase in the demand of coal; as well as most of the projected growth in electricity demand.


In this worrying context, the OECD is preparing a Green Growth Strategy to develop practical policy tools for securing the shift to a greener economy. Its recommendations will be delivered a year from now. It will cover a broad range of policy areas, including fiscal, innovation, trade, labour and social policies. All geared towards a supreme objective: transforming our production and consumption patterns into a source of cleaner growth.


We know that South Africa is increasingly committed to a more environmentally friendly type of growth. You are one of the first emerging economies to introduce incentives to develop renewable energies. We very much hope that your country gets closer to our OECD Green Growth Strategy  and Innovation Strategy Strategies.


Your country’s effort and experience in science and technology is comparatively remarkable. Just take a look at the laureates and scientists of this Institution. Your Nobel prizes in Medicine and Chemistry, the contribution of your academics to the Intergovernmental Panel on Climate Change, your 15 South African Research Chairs and your 90 Rhodes Scholars, are a few samples of your scientific muscle.


Now I understand why scientific articles from South Africa more than tripled between 1996 and 2007  or why this country has reduced the share of their patents involving international co-invention over the past decade.  I want to congratulate you for this effort. It will pay off generously in more investment, better jobs and greener growth.


Ladies and Gentlemen:


Innovation can be a strong economic energy, it can be a remarkable social equalizer and it can be a dynamo for green growth. It’s a matter of supporting the development of great ideas into commercially viable and socially responsible projects. Let’s try to find those ideas that will grow into more and better jobs and sustainable development for South Africans.


Think about it: The Internet didn’t exist 40 years ago; Microsoft was an idea 30 years ago; Google didn’t exist 15 years ago; Twitter and Facebook were an idea 10 years ago. Now they are power engines for growth and social change. Even in troubled times.


What’s your idea?


Thank you very much for your attention.


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